INSUBCONTINENT EXCLUSIVE:
By Milan Vaishnav, CMT, MSTAThe domestic equity market had a strong week, and made a steady move on the upside to end the week with decent
In the week before, Nifty had defended its crucial support level at the 200-DMA on the daily charts and the 50-week MA on the weekly
chart.
After successfully defending these levels, the market capitalised on it to inch higher
Nifty ended the week with net gains of 356.80 points, or 3.16.
We have a truncated week ahead, with Monday being a trading holiday for
Given the rise seen throughout the week gone by, Nifty has again scaled the levels that it had touched earlier following the corporate tax
Nifty has to take out the previous high and capitalise on the current up-move, but it needs to be supported by fresh buying.
While
volatility has declined steadily during the week gone by, we expect it to return
Nifty might see a volatile start on Tuesday as it adjusts to global trade
That said, if there is no fresh buying, there is every possibility of the current rally getting stalled near the 10,700 level
Though the 50-week moving average, which currently stands at 10,964, has become a solid immediate base, it would be critical for Nifty gets
support from fresh buying to sustain the rally over the coming days.
Nifty will see the 11,700 and 11,890 levels acting as key resistance in
the coming days while supports should come in at 11,460 and 11,300 levels.
The weekly RSI stands at 57.7464
Though it has marked a 14-week high in line with Nifty, it is meeting its pattern resistance
Even if Nifty inches higher, one has to be wary of such an up-move if it is fuelled solely by short covering, and not supported by fresh
Any up-move caused only by short covering without any buying support will turn unhealthy at higher levels
So, in a rising market, one may have to chase momentum, but one should do so it with a lot of caution
our look at the Relative Rotation Graph, we compared various sectoral indices against CNX500 (Nifty500 Index), which represents over 95 per
cent of the free-float market-cap of all the listed stocks.
The review showed while IT, Financial Services and Services sector indices are
taking a breather, others like Auto, Energy, Infrastructure and Metal indices are building on their momentum and are placed in different
Some sectoral rotation is evident within these groups.
Consumption and FMCG are the only two sectors that are placed in the leading quadrant
However, they are expected to take some breather, but likely to relatively outperform the broader market
Energy and Auto indices have firmly advanced within the improving quadrant
They will see stock-specific outperformance over the coming days
Pharma index has taken a U-turn and may soon find itself in the lagging quadrant if the steady loss of momentum continues.
Important Note:
RRGTM charts show you the relative strength and momentum for a group of stocks
In the above Chart, they show relative performance against NIFTY500 Index (Broader Markets) and should not be used directly as buy or sell
signals.
(Milan Vaishnav, CMT, MSTA is a Consultant Technical Analyst at Gemstone Equity Research - Advisory Services, Vadodara
He can be reached at milan.vaishnav@equityresearch.asia)
